Grandparents are paying for college...again

You'd think that when it comes to paying for college, once would be enough for anyone. But apparently today's grandparents are pitching in. Again.

Some 53 percent of grandparents, who presumably put their own kids through school, are helping or plan to help pay their grandchildren's college costs, according to new research from Fidelity Investments. And we're not talking a 50 dollar bill in a birthday card: The median amount grandparents anticipate chipping in for all their grandchildren is $25,000, according to the research.

"The numbers were a little bit higher than we expected," said Keith Bernhardt, vice president of college planning at Fidelity. "This definitely showed us the generosity of the generation, but also the emotional impact of the topic."

Grandparents seem to be even more generous to their grandchildren than parents expect. In a previous Fidelity survey of parents saving for college, nearly two thirds said they did not expect monetary gifts from family and friends to pay for a significant part of college.

But the grandparents' generosity has a dark side. This older generation is not fully prepared for retirement, so these grandparents could wind up burdening their children and grandchildren despite the generosity with college. Some 55 percent of the grandparents in the Fidelity survey said they were somewhat concerned or very concerned about saving enough for their own retirement.

Why are these grandparents so generous when it comes to higher education?

Many parents simply can't afford to fund their children's education on their own. Over one-fourth of the grandparents helping or planning to help pay for college said they felt obligated because their own children couldn't do it, or they wanted to ease their children's financial burden.

"I think there is a recognition that it's very difficult for one set of parents to be able to save enough to really cover the cost of college," Bernhardt said.

That's an understatement. Only half of all American families are saving for college, according to a survey by Sallie Mae. And even among families with teens who are saving more, the average amount saved is $21,416, less than one year's tuition and fees for an out-of-state student at a public four-year college.

Plenty of parents don't even have their retirement covered, let alone college for their children. Nearly half of the youngest baby boomers, ages 50 to 55, report having less than $100,000 saved for retirement, according to the Insured Retirement Institute.

Generation X parents, born between 1962 and 1981, are faring even worse. Some 42 percent have less than $50,000 saved for retirement, the Institute found, and their median savings has dropped 15 percent over the past two years.

"The lingering effects of the 'Great Recession' appear to have caught up with GenXers retirement savings," the report's authors wrote.

Not only that, those college graduates returning home and living off Mom and Dad often belong to families where other kids are getting ready for college. And if you're looking for the so-called sandwich generation, the people who are caring for both parents and children, it's this age group. None of these trends suggest parents of college students will find it easier to save anytime soon.

The Fidelity study is appearing at a time when college costs are at record levels, and so is student debt. Average student loan debt, in 2010 dollars, rose from $21,736 in the 2001-2002 school year to $27,910 in 2011-2012, according to an analysis of government data by Mark Kantrowitz, publisher of Edvisors Network. No doubt, grandparents are eager to help their grandchildren avoid a crushing debt burden.

The urgency of that need is underscored by college graduates' less-than-sterling earnings prospects.

Median earnings for young adults with a bachelor's degree, expressed in 2012 dollars, actually dropped from $51,000 to $46,900 between 2002 and 2012, according to Department of Commerce data.

Still, college graduates earn significantly more than people the same age without college degrees—more than double the earnings of people without a high school diploma. And that's a good thing. With a bit of luck and pluck, they should be able to start saving for their own children's college in no time.